KLM Royal Dutch Airlines
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- KLM Royal Dutch Airlines
P.O. Box 7700
1117 ZL Schiphol
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- Amsterdam Schiphol Airport
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Based in Amsterdam, KLM is the national airline of the Netherlands. Part of the Air France-KLM Group, KLM operates an extensive network which includes services within Europe and to Asia, Africa, North America, Central and South America and the Middle East. KLM is a founding member of the SkyTeam alliance.
Location of KLM Royal Dutch Airlines main hub (Amsterdam Schiphol Airport)
2,274 total articles
210 total articles
United Airlines continues its efforts to close the gap with peers after posting solid 3Q2014 results
United Airlines admits there is still much work ahead to close the gap with its large network airline peers in key metrics such as margin performance. But efforts United has undertaken to improve its revenue performance showed promise in 3Q2014 as it out-performed its peers in passenger unit revenue growth.
Even as it faces some unit revenue headwinds in 4Q2014, United believes it will sustain profitability during the last quarter of 2014 as the US domestic market remains robust.
Similar to rival Delta, United could grow its capacity to upwards of 2% in 2015, which may cause some concern among investors. But United stresses that much of the growth stems from aircraft up-gauging, improved utilisation and increasing density of certain aircraft.
Transavia part 2: still constrained by unions and forced into high degree of overlap with Air France
Air France's recent draft agreement with pilot unions over the future growth of its Transavia France LCC operation puts the Air France-KLM Group in a better place than it was before the deal was struck. This is particularly so in view of the damaging strike that preceded the accord.
However, the deal comes with some major compromises. Instead of adding new Transavia routes across Europe via the now abandoned Transavia Europe, Air France will put all its LCC growth into Transavia France. In our first in this series of two reports analysing Transavia, we concluded that the abandonment of its plans to establish a pan-European LCC vehicle was a high strategic price to pay.
In this second report, we highlight the extent to which Transavia France will still face significant constraints as a result of management concessions to unions. We also question the merit of the high degree of overlap between Transavia France's network and that of Air France.
Air France and unions representing its pilots and those of Transavia France have reached an agreement over the future development of the LCC subsidiary's French arm. This deal with SNPL Air France ALPA and SNPL Transavia needs ratification by the unions' membership, which Air France-KLM expects in mid-Nov-2014.
A key element of the deal is that Transavia France may increase its fleet beyond the current limit of 14 aircraft, which it has reached. Moreover, Transavia France pilots will continue to have Transavia France contracts. However, a crucial concession to the unions is the abandonment of plans to launch Transavia Europe, which was to have started up at bases outside the home markets of France and the Netherlands.
In this first report on the new draft deal to grow Transavia France, we consider the competitive environment and suggest Air France-KLM may one day rue the scrapping of its Transavia Europe plans. Part two will focus on how Transavia will develop alongside Air France's own medium-haul operations.
Savoy Capital, a potential bidder for TAP Portugal, has said that Portugal's Government "has to decide whether or not to exit the aviation business" (Dinheiro Vivo, 07-Oct-2014). Headed by ex-Continental Airlines president Frank Lorenzo, Savoy said that TAP has adopted a favourable strategy and the Lisbon hub is attractive.
If (as expected) the privatisation process is relaunched before the end of 2014, any potential bidder will need to be convinced that TAP can drive a more significant gap between its RASK and CASK in order to generate more attractive returns. Savoy seems to be the only non-airline company linked with a possible bid for TAP, for whom a strategic airline investor with a complementary route network might be the best option.
Following our recent analysis of TAP's financial performance, this second report on TAP looks at its key strategic asset: its Latin American network, in particular its operations to Brazil. We consider those airlines to whom TAP's position in this market may be of interest and so who may be preparing to make a bid in the privatisation.
Delta Air Lines has slightly adjusted its passenger unit revenue targets for 3Q2014 triggered by oversupply in some of its markets, unrest in the Middle East and the Ebola outbreak in Africa.
The airline has previously warned of tougher year-on-year comparisons in 3Q2014 after recording 7% unit revenue growth in 3Q2013. But despite the challenges that have cropped up during the last few months, Delta still predicts a strong performance in the quarter with double digit operating margin expansion and solid cost containment as demand in the US domestic market remains strong.
As it prepares to make trans-Atlantic capacity adjustments for the US winter time period in conjunction with its SkyTeam alliance partners, Delta is also making changes in it Pacific network by down-gauging Boeing 747s it operates to Tokyo and replacing them with smaller and more efficient aircraft.
At its recent Investor Day, Air France-KLM gave details of its 'Perform 2020' five-year industrial plan, originally outlined in Jul-2014. Much of it is a continuation of 'Transform 2015': discipline over capacity and capital, further unit cost reduction (at 1% to 1.5% pa) and further balance sheet fixing. It also involves more restructuring of the short and medium haul passenger business, including a more aggressive expansion of LCC Transavia from 44 aircraft this summer to 100 in 2017, a further cuts in the full freighter fleet and growth in the more profitable maintenance business.
Perform 2020 moves Air France-KLM in the right direction, but the pace of change is glacial. The group's profitability lags its main rivals' as it continues to be hamstrung by legacy issues such as union power. Transavia is a genuine low-cost operator, but, since its French arm started in 2007, its total fleet has grown by 16 aircraft, close to 60%. Over the same period, the combined fleets of Ryanair, easyJet and Norwegian have more than doubled, adding over 300 units. It has taken Air France-KLM far too long to wake up to its LCC's potential.